Whether you’re an evolutionary biologist, cultural sociologist or a neoclassical economist, the study of human fertility behaviour can be boiled down to an interplay between two immovable forces: the quantum and tempo effect. The first treats the fundamental question of reproduction; how many children to have, and how much resources to invest in each of them. In its simplest form, the quantum effect is the study of how much, if at all, women exert control over the quantity of offspring they produce. The extent to which they do—and almost all disciplines agree that they do in most social contexts—the analysis focuses on the conditions that determine the number of children, and how much resources that are devoted to each of them. It is an analysis of trade-offs, concentrated on the trade-off between the quantity and quality of offspring. How this balance is achieved represents one of the most crucial processes in the study of reproduction, aggregate fertility, and the demographic transition.
Read More"Where are we in the business cycle?" is a question macroeconomists often are asked by investors. On the face of it, it is a reasonable question. The macroeconomic backdrop is an important input variable for key asset allocation decisions such as whether to be over- or underweight stocks relative to bonds, sector rotation, not to mention FX and credit positions. The question invites the idea that economic expansions are on the clock. They are in the sense that their average length is a question of a relatively simple empirical exercise. But a classic truism still remains. "Economic expansions don't die of old age, they're killed by economic policy", a phrase I have adapted from the U.S. version ending with the idea that economic expansions usually are killed by the Fed.
Read MoreMarkets are moving, and I’ll have more to say about that in due course, but we before we get to that, I am finally ready to present the third chapter in my running demographics project. The landing page for the project can be found here. You can get the PDF for the third chapter below, or via the landing page.
This chapter kicks off the description, analysis and discussion of fertility and birth rates. It is the first of, I suspect, three chapters on fertility. In it, I try to cover three bases. First, I cover the basics, defining the different ways in which fertility and birth rates are described quantitatively in the literature, and the distinction between these terms. Secondly, I summarise the stylised facts about the global fertility transition, when it began, and how it is going. My objective has been to strike a balance between the big picture and sufficient detail to allow for the discussion individual case studies across individual nations, or groups of countries. The key point, from both an empirical and theoretical perspective, is that fertility does not stabilise at replacement levels in the final stages of the demographic transition. In this way, the fertility transition is an ongoing phenomenon, in contrast to the picture painted by the stylised model of the demographic transition. Thirdly, I run through the theory of sexual selection as described by Trivers (1972), and used in Richard Dawkins’ seminal, The Selfish Gene. There are two reasons for this. First, the basics matter. The game of mate selection, which feeds through to how parents share the costs of reproduction and child-rearing, is crucial to understand why births occur in the first place. The idea that evolved behaviour described by Trivers (1972) can be used to explain phenomena in a modern context invites us to heed F. Scott Fitzgerald’s advice that “the test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.” It is reasonable to expect that many phenomena observed in a modern society can be traced back to core evolutionary processes. But equally, it is unreasonable to go searching for an evolutionary explanation for every phenomenon that social scientists might be interested in, in a modern economy. Whatever the balance between these two positions, the link between modern behaviour and pre-modern evolutionary theorems is a constant source of debate and controversy in the literature on demographics and fertility.
Read MoreThe more I think about the current debate about inflation, the more I am inclined towards the following remarkable conclusion. We currently do not have a good framework to explain inflation, neither cyclically nor structurally. Perhaps more appropriately, the old consensus among economists and policymakers on what inflation is, how it arises, and what to do about it has been severely challenged, if not shattered entirely. In a post-pandemic world of a clear, and almost textbook, inflationary mismatch between demand and supply, this has created the odd situation in which everyone is talking about inflation, and more recently inflation expectations, concluding that it either doesn’t matter or that we don’t understand how inflation works in the first place. Nowhere is this clearer than in the debate about whether presently high inflation is transitory or not. The thrust of this discussion has as much to do with the main interlocutors convincing each other that high inflation doesn’t matter, as it is about agreeing on what, in fact, transitory means.
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